People with entrepreneurial mindsets search for ways to earn money online amidst the pandemic. One of the avenues actively explored by determined entrepreneurs is dropshipping. Dropshipping is one of the thriving industries during the implementation of strict lockdowns and quarantine protocols.

In fact, the global dropshipping market size has increased to more than 65% from 2020 up to the current year. Thus, explaining the growing interest of traditional business owners and entrepreneurs to venture into the retail eCommerce market.

What is Dropshipping?

In its simplest terms, dropshipping is a retail fulfillment method where an online store or online seller does not possess the item it sells to customers. Any product purchased by a customer from a dropshipper is shipped directly to the customer from a third-party source.

Local and overseas manufacturers, suppliers, distributors, or even other online stores are often the inventory sources of dropshippers.

In a typical dropshipping business, dropshippers do not own and maintain a warehouse. There is no necessity for a warehouse because suppliers send orders directly to the customer’s address.

The change in purchasing behavior of consumers has influenced many business owners to transition to eCommerce. Dropshipping is one of the most attractive avenues for making money online due to its growing market size.

Apart from the growing market size of dropshipping, business owners and entrepreneurs are drawn to this business model because of the following:

Low Initial Investment: The dropshipping industry is steadily growing. One of the factors behind its steady growth is its achievable capital requirement. Entrepreneurs can start their own dropshipping business for as low as $300 to $500.

Low Inventory Management Cost: Since suppliers will handle fulfillment, there is no need to spend money on a warehouse. Therefore, lowering inventory management costs.

Scalability of Business: Dropshipping is highly scalable once you have determined a profitable niche. Since there is no need for a physical location or personnel to manage fulfillment, you can divert your funds for expansion.

Flexibility of Business: You can do dropshipping almost anywhere; there is no need for a physical store. Additionally, you can quickly add or remove products that are not doing well in the market. Hence, the business is highly flexible.

Common Dropshipping Mistakes

Although dropshipping remains profitable, some online entrepreneurs are having difficulty augmenting their dropshipping business. Newbie dropshippers, in particular, commit some of these common dropshipping mistakes outlined below:

  • Inability to Establish A Brand

A dropshipping business requires good branding to stand out from the competition and encourage repeat purchases. One of the common mistakes of newbie sellers or dropshippers is poor branding. They neglect to introduce product improvement that helps separate their brand from competitors.

To help you attract attention to your products or brand, you can utilize eCommerce marketing tools and services to improve your branding. You can also request your suppliers add your brand to all product packaging aspects. It can help customers quickly recognize and remember your brand, despite having similar products sold online.

  • Inadequate Product Research

Sometimes dropshippers neglect to perform thorough product research. They immediately order in bulk from suppliers without scrutinizing the quality of the product, the number of competitors, and their potential return on investment (ROI). It will help if you look for high-quality products with a good profit margin to sustain your business.

  • Too Much Reliance On Suppliers

Both newbie and experienced dropshippers often fall victim to this dropshipping mistake. One of the main reasons for over-reliance on suppliers is complacency.

After experiencing success and no issues with the suppliers, some online sellers become too complacent when handling product orders. They tend to delegate critical decision-making responsibilities to their suppliers.

Consequently, too much reliance increases lead time, backorders, product defects, and other inventory supply-related issues. There should be no grounds for complacency; always monitor every aspect of your product sourcing despite the performance of your suppliers and your established business relationship.

  • Unrealistic Expectations

A sizable number of newbie dropshippers learned about dropshipping only from success stories posted on social media. Some of these dropshippers ventured into dropshipping, thinking it was their key to financial freedom.

Without proper research or mentoring, newbie dropshippers immediately invest large sums of money into the business, thinking it will yield instant success. Unrealistic expectations sometimes lead to poor return on investment or outright business failure. 

  • Price Slashing

Another common mistake that online sellers or dropshippers commit is undercutting the item price. Such action aims to attract more customers and increase market share by lowering the price in response to a competitor’s price adjustment.

Online sellers often practice such a pricing strategy on giant retail platforms like Amazon. Amazon dropshippers tend to engage in price wars to the point of sacrificing their profit margin.

You can use an Amazon repricer if you wish to avoid price wars and protect your profit margin in the process. An AI repricer can help you adjust your listing price to a competitive level.

  • Neglecting Customer Feedback

Whether dropshipping through your website or using platforms like Amazon or eBay, you should never ignore customers’ sentiments. One of the mistakes dropshippers make when managing their business is that they neglect to check and respond to customer feedback.

The customer review section serves as an avenue for customers to voice their experiences about your business in its entirety. You should immediately address any customer reviews issues to avoid undermining your business’ credibility.

Always remember to check customer reviews and reply to them, especially the feedback that expresses concern or suggestions. Furthermore, you should also have active social media accounts to maximize customer feedback.

Social media is one of the channels for customer feedback. Accordingly, almost 50% of customers voice their complaints on social media instead of business websites. Having an active social media account will help increase your chances of receiving feedback from customers and eventually resolving them.

Learning From Mistakes

The dropshipping industry managed to thrive amidst the pandemic. It says a lot about the reliability and flexibility of the business.

If you are looking for a tested and proven method to make money online, you can try dropshipping. You can always refer to the aforementioned common dropshipping mistakes to guide you through the process of establishing and improving your business.

However, it’s worth emphasizing that, similar to other eCommerce ventures, dropshipping requires effort, dedication, research, and patience to succeed.